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Client Testimonials

Life was simpler before kids. We could file our own taxes, maybe get a refund. After buying our house and having twins, we needed help. SINGER TAX met with us, explained everything in easy to understand terms, and helped us prepare for future years. And the refund . . . was great.

Glenn & Hilory

Scottsdale Parents

Harvey and David, my wife was right, we should have used SINGER TAX from the beginning. Thanks for making the transition so easy. The forms were easy to complete and your professionalism was appreciated. Yes, the refund was great too.

Paul & Marinna

Phoenix, AZ

Federal & State Tax Filing Information for Arizona Taxpayers

Call (602) 482-8006 for Personal Income Tax Preparation Help from a CPA Now!

Introduction

Below are some of the most often asked tax-related questions that we here at Singer Tax & Accounting, PC, PC receive. Please continue reading to discover information concerning Arizona and federal tax laws and policies that may apply to your situation. If you’re unsure what your personal tax liability is for this tax season or would like to have a previous year’s tax return inspected by a certified public accountant (CPA) please contact us today.

General Filing Questions

Tax season can be fraught with difficulties as you try to make sure all your information and figures are correct. Much is made of the complexity of the tax system, but by reading some of the information relating to general filing below, you should be better prepared for when tax time comes around.

Do I Need to File an Arizona Tax Return?
Once your income is above a certain level, you are required to file a federal income tax return. There are a number of other factors involved too including the source of your income, your filing status, and your age.

Do I Need to File a Federal Tax Return?
Just like with an Arizona tax return, whether or not you need to file a federal tax return will depend on numerous factors – namely income level and filing status.

How Much Can Be Deducted for Each Exemption I Claim?
There are two kinds of exemptions: exemptions for dependents and personal exemptions. You are allowed to claim exemptions for yourself, each person you claim as a dependent, and your spouse. In 2014, you can claim up to $3,950 for each qualifying child, while you and your spouse are also allowed the same amount as a personal exemption.

What is My Filing Status?
This is an important factor when calculating taxable income, and this status is defined as the type of tax form an individual will use. It is based on family situation and marital status.

Who Can I Claim as a Dependent?
You can claim a qualifying relative or qualifying child as a dependent. Qualifying children must be under the age of 19 or under 24 and a full-time student for five or more months.

What is the Simplest Form to Use for My Taxes?
There are three personal income tax forms: 1040, 1040A, and 1040EZ. While the EZ form is the most straightforward, it may be worth using a longer form because there are more tax break opportunities.

Can I Claim My Personal and/or Spousal Exemption?
You can’t claim an exemption for your spouse as your dependent, but you can claim a personal exemption. To claim a personal exemption for your spouse, you must meet a host of requirements. For example, you must have been married on the last day of the tax year.

How Do I File a Deceased Person’s Tax Return?
Typically, a decedent’s tax return is completed in the same manner as when they were alive. All income to their time of death must be reported, and the credits and deductions the deceased was entitled to can be claimed.

Deductions

As the IRS announces changes to tax deductions every year, it is important for you to keep up-to-date in order to determine how much you are entitled to.

How Much is My Standard Deduction?
The amount of the standard deduction you will receive depends on the status you qualify for. In 2014, single taxpayers who file separate returns can claim a standard deduction of $6,200; this amount also applies to married couples who file separately. If you are married and are filing jointly, the standard deduction doubles to $12,400, while those filing as head of household can claim $9,100.

Deducting Charitable Contributions
You can deduct contributions to charities. The IRS has a list of charities that qualify and also has maximum amounts that can be deducted. As of 2014, the limit is 30 percent of your adjusted gross income (AGI) for private organization donations, while public charities have a deductibility limitation of 50 percent.

Deducting Mortgage Costs
There are a variety of home-related expenses you can deduct, including home mortgage interest payments, mortgage points, and real estate taxes. Certain types of home improvements could also lower your tax obligation when you sell your home. Projects such as adding an addition may qualify, for example.

Deducting Medical & Dental Expenses
In July 2013, the threshold for qualified dental and medical expenses was raised to 10 percent of your adjusted gross income. This threshold remains at 7.5 percent until the end of 2016 if you are married and at least one spouse is 65 or over.

Deducting Moving Expenses
The IRS has two basic rules. The distance test requires your new home to be at least 50 miles farther away from your work location than your old home. The time test requires you to have had 39 weeks of full-time employment in the 12 months following the move. If you don’t meet the time test requirement after believing you would, you can complete Form 1040X to amend your tax return.

Deducting Student Loan Interest
You could qualify for a deduction of up to $2,500 on your student loan interest. You must meet a number of criteria, including having a modified adjusted gross income of under $80,000 or $160,000 if filing jointly.

Deducting Gambling Money
Losses incurred through gambling are tax-deductible but only to the extent of your winnings (you can only claim $5,000 if your winnings are $5,000 and your losses are $20,000, for example). You need to be eligible to itemize your deductions, and you can’t claim any tax relief if you claim a standard deduction. You will need to produce documentation to prove your losses, such as Form 5754, Form W-2G, credit records, and wagering tickets.

Miscellaneous Deductions
Each year, taxpayers miss miscellaneous deductions on Schedule A. In order to qualify, your miscellaneous deductions must be more than 2 percent of your adjusted gross income, and even then, you only receive any amount above 2 percent. So if your AGI is $100,000 a year and you have miscellaneous expenses of $3,000, you only receive $1,000 in tax deductions, as the first $2,000 does not count.

Tax Credits

Tax credits are extremely important and can make a significant difference to the amount you need to pay when filing your tax return. Below, we look at the various tax credits on offer to see if you are eligible for them.

Child Tax Credit
To receive a child tax credit you must meet the criteria set forth by the IRS. Each child under 17 that qualifies will allow for up to $1,000 in credit.

Making Work Pay & Government Retiree Credit
Just about every taxpayer gets to take advantage of the Making Work Pay credit, with $400 for single filers and $800 for joint filers. The Government Retiree Credit is for government workers who receive a pension for work not covered by Social Security.

Credit for the Elderly or Disabled
If over 65 years of age, you may be eligible for a tax credit! You must also have an AGI of $17,500 if single or $25,000 if filing jointly. If both spouses are eligible, you may receive a $25,000 credit.

Education Credit
Education credits include the American Opportunity Credit and the Lifetime Learning Credit; with just about everyone who makes $63,000 per year or less being eligible or $127,000 per year or less if married.

Types of Tax Credits

A tax credit reduces your total tax liability. While a deduction lowers the amount of taxable income, a tax credit directly decreases the amount of tax you have to pay. Therefore, a tax credit is dollar-for-dollar more valuable than a tax deduction. Here are some of the most popular refundable and non-refundable tax credits you need to know about.

Refundable Tax Credit
Refundable tax credits can actually reduce your tax liability below $0, which mean that you, the taxpayer, will be rewarded with a refund. Continue reading to see the types of tax credits that are refundable.

Non-Refundable Tax Credit
Unlike a refundable credit, non-refundable credits will not provide the tax payer with a refund if their tax liability goes below $0. See which tax credits are non-refundable by selecting ‘read more’.

Forms of Taxable Income

There are different forms of income that can be taxed, and what you pay depends on your situation. For example, there are people who are surprised to discover they must pay tax on the benefits they receive. It can be difficult to determine precisely what should count as taxable income. In order to correctly complete your tax return, you need to understand that most income you receive is taxable. This includes common income such as tips, salaries, wages, and compensation for unemployment. Below, we look at various forms of income that are fully taxable, so keep reading to better understand what gets taxed so you can budget accordingly.

The following are several common forms of taxable income, which can also include capital gains, discounts, dividends, jury duty fees, punitive damages, and much more. When in doubt, talk to a reputable accounting firm to find out what should be declared as taxable income.

Social Security & Tier 1 Railroad Benefits
Both of these forms of income are taxable and they can be calculated by using the IRS Form SSA-1099, which will let the taxpayer know which of three levels of income they fall into.

Pension & Annuity Income
Income earned through a pension or annuity is taxable; however, you may not have to pay taxes on the entire amount. They are fully taxable if you have no investment in the contract due to not contributing to the pension or annuity.

Cancellation of Debt Income On Personal Residence
Foreclosure or a restructuring loan on your home could qualify you for the Mortgage Forgiveness Debt Relief Act – an exclusion of up to $2 million in debt. This information is calculated using Form 982.

Gambling Winnings & Losses
If you win money while gambling, this is considered taxable income. Furthermore, all non-cash winnings must be reported as fair market value. Gambling losses can be deducted, but the amount is based on the total earnings.

Rental Income & Expenses
Income earned from rental properties is also taxable; however, you can offset the total taxable rental income by deducting the costs of renovating or preparing the property for rent.

Alimony Received
If your spouse pays you a regular alimony payment, you must claim this as taxable income. The person making the alimony payment gets to deduct those payments from his/her personal taxes.

Debt Forgiveness
If an official lender forgives a debt that you owe to them, you must record the money you initially received as income or the difference between what you borrowed and managed to repay.

Retirement Income
Assuming that your retirement income is not generated from a Roth or Roth IRA, you’ll have to pay income tax on the funds. This includes early withdrawals, which can also accompany a stiff penalty – sometimes as much as 10 percent.

Tips & Gratuities
If you’re in the service industry and the majority of your income is derived from tips or gratuities, you must claim this income in your taxes. This is not exclusive to cash gifts, but non-cash gifts too, such as tickets to an event or anything else of monetary value.